Talanx subsidiary HDI-Gerling Industrie Versicherung AG will hold the stake, Talanx said in a press release on Wednesday. The transaction is expected to close this year, according to the press release.

"We are very optimistic about this partnership," Christian Hinsch, deputy chairman of Talanx's board of management, said at a press conference in Hanoi. Vietnam's insurance industry has "great potential," he said.

Germany's third biggest insurer joins a growing list of foreign firms that have this year invested in Vietnamese companies after government monetary tightening aimed at tackling inflation in the Southeast Asian country curbed borrowing, prompting some local industry to look overseas for financing.

Foreign companies are able to take advantage of low interest rates at home to invest in assets in Vietnam, Chris Freund, managing partner at Ho Chi Minh City-based Mekong Capital, said Wednesday.

"That's basically a perfect environment for inbound M&A," said Freund in a telephone interview. "It's a great opportunity for them to acquire assets very cheaply in Vietnam with cheap capital from their home country."

New York-based KKR & Co. made the largest private-equity investment in Vietnam when it agreed on April 13 to pay $159 million for a stake in Vietnamese fish-sauce maker Masan Consumer Corp.

Fortis Healthcare International Pte, agreed on August 10 to pay $64 million for a majority stake in Hoan My Medical Corp., a Vietnamese hospital operator. Japan's NTT DoCoMo Inc and Citigroup Inc also said this year they have purchased stakes in Vietnamese firms.